Business ethics and human resource management

Themes and issues

Diana Winstanley, Jean Woodall, Edmund Heery

The Authors

Diana Winstanley, Imperial College Management School, London, UK

Jean Woodall, Kingston University, Kingston upon Thames, UK
Edmund Heery, Cardiff Business School, Cardiff, UK

Abstract

Reports on the conference on Ethical Issues in Contemporary Human Resource Management, held in April 1996. Notes
concerns raised at the conference relating to a lowering of employment standards. These included factors such as: insecurity
and risk, transfer of risk and surveillance and control. Suggests a number of alternative ethical frameworks useful in an
analysis of HRM, including such elements as: basic human, civil and employment rights, universalism and community of
purpose. Considers methods of defending such an ethical focus from charges of utopianism, and suggests that ethical HRM
will be a developing theme over the next few years.

Article Type: Viewpoint

Keyword(s): Employment; Ethics; Human resource management.

Personnel Review
Volume 25 Number 6 1996 pp. 5-12
Copyright © MCB UP Ltd ISSN 0048-3486

Introduction

The relationship between ethics and human resource management is emerging as a subject of serious academic enquiry. The
papers in this special issue of Personnel Review begin to map out the critical issues for research and practice in this area.
They are drawn from a conference which brought together human resource academics, practitioners and business ethicists in
order to identify how an ethical focus might inform both academic research and debate and the practice of human resource
management (HRM) in organizations. The conference on “Ethical Issues in Contemporary Human Resource Management”
was held at Imperial College Management School in April 1996 and was jointly sponsored by the British Universities Industrial
Relations Association and the European Business Ethics Network, UK. We would like to thank the sponsoring organizations
and everyone who contributed to the conference and helped to make it a successful event.

Three main themes emerged at the conference and we have elected to elaborate on these in this introduction. The first
concerned ethical questions which arise from contemporary developments in the practice and analysis of HRM in British
industry. The second was concerned with ethical concepts and the appropriate ethical frameworks which can be used to
review HR practice. The third focused on the question of reform and what might be done practically to give effect to ethical
standards in HRM.

Ethical concerns

Running through many of the papers and much of the discussion at the conference was a conviction that key developments in
contemporary HRM were threatening employment standards. Contributors, that is, shared Miller’s[1] suspicion that we are
witnessing a lowering of standards and that this should excite ethical concern. Several types of undesirable change were
identified.

Insecurity and risk

Debate over the precise extent and significance of the trend towards greater job insecurity is ongoing but for many employees
the world of work has become less secure in recent years[2]. This has arisen partly as a result of changes in the
macroeconomic climate and the re-emergence of mass unemployment; in part from business restructuring and the stripping
out of costs through redundancy, delayering and outsourcing; and also it derives from the adoption of more contingent
contracts of employment and systems of reward.

The last of these developments attracted most discussion at the conference and is examined in the articles by Warren and by
Heery, and the paper by Stanworth and Moon[3]. From an ethical perspective, the switch to a less secure, contingent
employment relationship is problematic in two regards. First, it raises the question of the bounds of responsibility of the ethical
employer. Is it legitimate for employers to require employees to assume an increasing burden of economic risk simply because
it is possible and profitable to do this, or should organizations, frequently large and well-resourced, accept responsibility for the
promotion of employee wellbeing?

Moreover, in an economy characterized increasingly by sub-contracting, Purcell’s paper[4] raised the question of the extent of
the responsibility of firms for the employment standards of their suppliers and sub-contractors. This is an issue which Oxfam
has recently pushed into the public domain. It has launched a campaign to persuade clothing retailers to ensure that the goods
they sell have been produced under acceptable social and employment conditions which comply with standards set by the
International Labour Organization[5]. As Purcell[4] pointed out, in a core-periphery model of employment, we cannot merely
hold up the core company as an exemplar of ethical HRM without considering the less well off periphery.

Another problematic feature of the shift towards greater risk and insecurity for employees is that this has been occurring at a
time when other “stakeholders” have been acting to insulate themselves from risk. Arguably, a central feature of economic life
in recent years has been a transfer of risk from those who finance activity (banks, institutional investors, shareholders,
taxpayers and the Treasury) to those in paid employment. The ethical question which arises here is whether this shift is
equitable or compatible with norms of distributive justice. It might be suggested that the transfer is inequitable because
investors are in a stronger position to spread their risks than employees and that what has been happening, crudely, has been
the exploitation of a change in bargaining power by the stronger party in the employment relationship.

Surveillance and control

A second concern arose from the spread of new forms of work organization and management control. These range from the
use of psychometric tests for recruitment and development examined by Baker and Cooper and the electronic surveillance
described by Stanworth and Moon, through bureaucratic performance management systems described by Winstanley and
Stuart-Smith to the more ambitious initiatives to manipulate employee attitudes and commitment through culture change and
“empowerment” described in this issue by Woodall and Claydon and Doyle[3, 6, 7]. On the one hand, therefore, it is possible to
identify changes in work and organization which seek to render the attitudes and behaviour of employees more visible to the
management gaze, while on the other, are initiatives which seek to shape employee identity and secure motivations and
definitions of interests which match the needs of the employer.

Perhaps the most obvious point of concern about these developments is that they reveal a rather scant regard for the
autonomy of employees. The right of the employing organization to intrude into the subjectivity of the employee, to scrutinize
and manipulate, is taken for granted. Whether it be the use of psychometric tests to select or promote employees, culture
change programmes which seek to challenge and reconstitute employee assumptions about work, or competence-based HRM
which seeks to promote conformity in attitudes and behaviour, the assumption is that it is legitimate for the employer to
trespass on the employee’s autonomy. Such a trespass may never be complete but the tendency for a great deal of
“sophisticated” HRM is to invade employee privacy.

New forms of organization can also invade privacy in another sense. Their purpose is to generate a highly committed
workforce which is flexible in terms of task, time and orientation to work and which will routinely work beyond contract. While
economic and possibly psychological benefits may accrue to such a workforce, a cost may be borne in terms of the atrophy of
domestic life and the stunting of wider social participation. The ideal company to which many HRM theorists and practitioners
seem to aspire is akin to the “greedy” institutions described by the US sociologist, Lewis Coser[8], more than 20 years ago. In
an analysis of utopian, religious and political sects, Coser noted that institutions of this type “greedily devour” the commitment
of their members and were intolerant of competing sources of identification. A similar criticism can be made of the aspirations
of the high commitment firm which poses a new threat to a segmented and essentially pluralistic organization of social life in
which multiple claims to commitment are tolerated.

A final problem with new forms of management control has to do with their effects on employees within the workplace.
Economists and industrial relations experts have produced evidence of labour intensification and there is growing concern that
a workplace regime of long hours and sometimes intrusive supervision can lead to excessive stress and ill health[9, 10]. While
new forms of work organization may have been effective in boosting productivity, a possible adverse effect on employee
wellbeing should be taken into account in evaluating these initiatives.
Deregulation

Closely allied with the use of new techniques of labour organization and control has been a renewed emphasis on the
management prerogative and the need for managers to respond to market signals without hindrance. A defining feature of
HRM, according to Storey, has been an “impatience with rule” and the encouragement of a “can-do outlook” among line
managers, who have assumed greater responsibility for bending HR practice to business needs[11].

Concern at this development features in the contributions by Heery and Winstanley and Stuart-Smith, who point to the possible
contravention of norms of procedural justice where emphasis is placed on “deregulating” management decision making within
the firm. A further concern is that the rhetoric of “can-do” management leaves little scope for employee participation in the
workplace, and that this element within contemporary HRM is at best unsympathetic to the exercise of democratic rights by
employees or to stakeholder models of corporate governance.

Rhetoric and deceit

The final ethical concern expressed at the conference had to do with a seeming decline in management integrity. Contributors
referred to the rhetoric of HRM with its themes of commitment and identification which fit ill with the trend towards more
insecure employment and with evidence of diminished employer commitment to employees. Particularly in Claydon and
Doyle’s article, the contradiction is highlighted between an invitation of moral involvement to employees and the adoption of a
relentlessly instrumental orientation to the employment relationship on the part of employers.

Each of these developments in HRM has been the subject of an essentially instrumental and managerial critique. Identification
of the potential costs to employers of contractual, market-driven employment relationships is not new, and likewise the
inflexibilities of strong but conformist cultures are raised in the literature. Also raised is the threat to employee commitment
where management is not “walking the talk” and action is perceived as inconsistent and arbitrary.

What is distinctive about the contributions in this issue of Personnel Review, however, is that they criticize contemporary
developments in HRM from an explicitly ethical perspective. Concern is expressed, not simply because changes of the kind
described might rebound on managers, but because they are undesirable in themselves. This may be because they
contravene accepted notions of justice, because they trample on employee rights or because they do not promote the
wellbeing of those who belong to the enterprise community.

Ethical frameworks: policy and practice

For most human resource academics and professionals, addressing general business ethics, let alone the ethical basis of
human resource policy and practice, is an unsettling experience. Sitting down at the banquet offered by business ethics
frameworks, they find themselves tackling terribly tough arguments with the wrong cutlery, while the butlers of moral
philosophy look on disapprovingly! Yet all human resource policy and practice raises unavoidable ethical questions. For
example, far from taking an amoral “realistic” stance, the advocates of the “new deal” in employment have grounded their
arguments about the change in the psychological contract between employer and employee in a particular set of ethical
theories of rights, obligations, and distributive justice[12]. Contrary to popular conceptions, these are not self-evident truths, but
contentious issues for debate. It is thus important that human resource professionals and academics re-engage with ethical
issues.

The problem is that the prevailing common-sense ethical framework justifies HRM policy in terms of its “utility to the
organization” or its “consequences”. Utilitarianism, or consequentialism is, however, a very weak principle for ethical action.
The fact that an act does not harm people does not make it ethical in itself. We can also question who decides the overall
organizational goals against which HRM policy is judged ethical. There are, however, a number of alternative ethical
frameworks which lend themselves to analysing HRM.

z Basic human, civil and employment rights. For example, with regard to job security, feedback from tests, openness and
consultation in those matters which affect us, transparency over criteria for decision making, avoidance of scapegoating,
the rights of whistleblowers not to be persecuted.
z Social and organizational justice. The procedural principles of distributive justice, egalitarianism, equity, equality of
opportunity can be used, for example, to evaluate systems for pay setting, recruitment and performance management.
z Universalism. Here the emphasis is on the Kantian principle of treating each individual as an end in themselves and not
just as a means to an end, or sacrificed in a utilitarian equation of the greatest good for the greatest number. Doing as
we should wish to be done by is a very strong ethical principle.
 z Community of purpose. This approach moves from the individual to consider the roles and responsibilities of
organizations. A more communitarian view of the organization, or at least taking a stakeholder rather than purely a
shareholder view of the firm, stresses the need for debate, respect and tolerance as virtues to be held above all else, for
example, when assessing strategies for downsizing and delayering.

So, as a starting point, writers on human resource management could benefit from acquainting themselves with relevant
business ethics frameworks. A review of the literature on business ethics frameworks in relation to human resource
management is provided by Kingsley Trezise in this issue. Awareness of these frameworks is the base level for engagement in
a productive debate.

The second level of engagement with ethics is for human resource writers to utilize appropriate ethical frameworks to help
explain and analyse the nature of the changes taking place in the employment relationship, and its ethical dimensions. The
third level is to use the frameworks more prescriptively in action, for practitioners to use them as a basis for action. At the very
least we could identify the “process of reasoning” by which HR policy decisions and acts are justified.

Putting ethics into practice

So far we have identified an agenda for academic debate and research. In some ways this resembles the agenda being
developed within “critical” human resource management, as evidenced in the work of Legge[13] and Keenoy and Anthony[14].
New insights are provided through utilization of some ethical frameworks, but the ethical contribution goes further than this.
Much critical HRM writing works with a strongly determinist model of the social order leading to scepticism as to the extent that
social change can be achieved in the face of economic realities. This leaves no role for agency, which is a vital component in
the ethical literature. An ethical focus can provide the potential to develop more of an action frame of reference than is usual
within critical HRM, as well as drawing on the various insights ethical frameworks provide. One of the major areas of heated
debate at the conference was over this very issue, determinism versus choice, with the question of how naïve such action-
oriented approaches are. Through highlighting ethical actions there may be the chance to influence the terms of policy debate.
Ethical standards can also be defended on their own grounds, as “good” in themselves, regardless of their influence,
particularly if we take a deontological perspective. If a significant contribution of ethical frameworks for HRM is to be the
identification of agency and the possibility of putting ethical theory into practice, then there clearly needs to be an elaboration
on how this might happen, in order to build a defence against the charge of utopianism. Some examples are given below:

z Charters. A number of papers at the conference identified charters and codes of conduct. For example, Gli Amici, a
group of HR practitioners, has drawn up a charter of rights and responsibilities of employers and employees[15],
Stanworth and Moon have produced a charter for the employment of teleworkers[3] and Heery (in this issue) advocates
the adoption of a statement of “guiding principles” of reward management. These can influence policy debate, and be
used for lobbying by professional associations, such as the IPD (Institute for Personnel and Development).
z Regulation. European and national legislation can be enacted to protect the rights of employees, for example Public
Concern at Work gave a paper at the conference on its work lobbying for a bill to protect the rights of whistleblowers
[16], and Heery suggests that there should be a legal right for employees to bargain with relation to their remuneration.
z Innovation in good practice. Pilot projects in ethical management as outlined in Winstanley and Stuart’s article can be
used to promote alternative employment practices. Organizations such as the New Academy of Business are also
attempting to provide an alternative agenda for management education.
z Challenge the inevitability thesis. More use needs to be made of the “flip flop” technique in research, that is, wherever a
new practice is advocated as being painful but necessary, we need to have a more detailed exploration of the counter
arguments, for example Warren’s article has attempted to deconstruct the inevitability thesis on the demise of job
security.

As well as identifying methods for getting ethics on the HR agenda, we also need to identify agents outside of the academic
world. Writers on ethics have focused on different agents and architects of change, including human resource specialists, line
managers, and senior managers. It is appropriate to mention briefly our views on the evolving role for human resource
specialists.

One role identified for the human resource function has been that of ethical “stewardship”. For example, some writers have
stressed the role for personnel professionals in raising awareness about ethical issues, in promoting ethical behaviour and in
disseminating ethical leadership practices more widely among line and project managers within new, flatter corporate
structures. Their role is also identified as communicating codes of ethical conduct, devising and providing training to enable
employees to uphold them, managing compliance and monitoring arrangements, and taking a lead in enforcement
proceedings[17, 18, 19, 20, 21].

However, the stewardship role for human resources is problematic. The recent history of the transformation of personnel
management into human resource management has been a story of the attempt to raise the status of the function by moving
away from its welfarist roots, and move it to be more closely aligned with strategy and with board-level representation, a kind of
conformist innovator role envisaged by Legge[22]. There is the risk that assuming ownership of the “ethical” issues and
conscience in the organization might yet again serve to decrease their status. Conversely, making HR professionals the ethical
conscience of an organization could allow line managers to argue that it is personnel’s and not their responsibility. Connock
and Johns[23], for example, argue that ethical leadership must come from the top of the organization and not be part of the
ghetto of human resource management. When we consider who the architects of the new human resource management and
recent organizational restructuring are, many decisions emanate from board level and not from HR professionals.

Methods and approaches for putting ethical human resource management into practice, and the role of the human resource
professional in this, are issues which could be explored in future forums. This is likely to be a developing theme in HRM over
the next few years. A growth in interest in stakeholding, ethical consumerism, and international labour standards are just some
of the developments which are putting ethics and HRM on the agenda.

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